At least one title insurance company in California has been utilizing software used by some real estate brokers to facilitate unlawful secret payments to the brokers for the referral of business to title insurers and other providers. Jacksonville, Fla.-based title insurance company Fidelity National Financial settled a case last month brought in California by the District Attorneys of San Diego, Ventura and Los Angeles counties. Fidelity National will pay $873,588 to settle the charges brought against the company.
In the civil lawsuit filed under California’s Unfair Competition Law, the District Attorneys alleged that Fidelity National operated a software platform — called Transaction Point — for real estate brokers and other settlement service providers in California. The state alleged that the system facilitated unlawful secret payments to the brokers for the referral of business to title insurers and other service providers. San Diego District Attorney Bonnie Dumanis had this to say:
Consumers deserve the benefits of competition when they buy homes and choose service providers and these secret payments in exchange for referrals violated expectation. We bring enforcement actions like this to ensure that free and fair competition – and not an undisclosed referral payment – determines who provides each real estate settlement service.
Fidelity National developed the Transaction Point software and its Web-based referral system in 2002 to assist brokers in preparing transaction documents and ordering related real estate settlement services, such as escrow, title insurance, and natural-hazard disclosure services. But the District Attorneys allege that “Transaction Point also was used by the brokers to charge and collect unlawful fees of $25 or more from providers of those services, including from service-providers affiliated with Fidelity National, which made these payments on their behalf.” It was said that Fidelity National stopped operating the Transaction Point system in late 2009 when the system was questioned by authorities.
Under the terms of the final judgment, which was agreed to by all parties, Fidelity National Financial, Inc. is prohibited from paying any real estate broker that places an order with Fidelity National for title insurance or other goods or services using Transaction Point or any substantially similar computerized order placement platform, or paying a fee to any real estate broker for the use of any substantially similar computerized system. Fidelity National also agreed to pay a total of $873,588, consisting of $123,588 in investigative and prosecution costs and $750,000 in civil penalties pursuant to the Unfair Competition Law to be divided among the three counties that prosecuted the matter. Hopefully, this was an isolated situation, but don’t “bet the farm” on it.
Source: Corporate Crime Reporter
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